How to Measure the Average Rate of Change?

Abstract

This paper contributes to the theory of average rate of change (ARC) measurement. We use an axiomatic approach to generalize the conventional ARC measures (such as the difference quotient and the continuously compounded growth rate) in several directions: to outcome variables with arbitrary connected domains, to not necessarily time-shift invariant dependence on time, to more general (than an interval) time sets, to a path-dependent setting, and to a benchmark-based evaluation. We also revisit and generalize the relationship between the ARC measurement and intertemporal choice models.

Publication
Mathematical Social Sciences

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